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Aug. 15 — Microsoft Corp. and Salesforce Inc. are among the first companies
certified under the recently opened EU-U.S. Privacy Shield data transfer program.

A U.S. Department of Commerce spokesman told Bloomberg BNA Aug. 15 that a total of
36 companies and their related entities have been certified under the program. Commerce
is “reviewing nearly 200 additional pending certifications and are expecting hundreds
more in the coming weeks,” he said. Commerce began taking applications Aug. 1.

The Privacy Shield is a replacement for the now defunct U.S.-EU Safe Harbor Program.
Over 4,400 U.S. companies were self-certified with Commerce under the Safe Harbor
and thousands of EU companies also relied on those certifications to send personal
data to those companies.

There is strong compliance motivation for companies to become Privacy Shield early
adopters. Companies that sign up before Sept. 30, will have a nine month grace period
from the date they certify to meet the new requirement that their third party business
partners will ensure privacy, according to the Department of Commerce's
Privacy Shield website.

Matt Gonzales, compliance manager at Dallas-based e-mail verification company Kickbox
Inc., told Bloomberg BNA Aug. 15 that “the Privacy Shield has put the company and
our customers at ease.” Being certified under the Privacy Shield shows “that the customers
can trust our company,” he said.

Privacy Shield certification “is the status quo for our customers,” Gonzales said.
Kickbox was previously certified under the now defunct U.S.-EU Safe Harbor program
and is one of the 36 companies certified under the replacement Privacy Shield.

Framework Plan Upgraded

The U.S.-EU Safe Harbor Program, was invalidated by the European Court of Justice—the
EU's top court—in October 2015 on the basis that it failed to sufficiently protect
the privacy of EU data subjects (14 PVLR 1825, 10/12/15).

The European Commission, the EU's executive arm, worked to secure changes in the framework
agreement to better protect personal data from potential U.S. government surveillance.
The Privacy Shield, as well as an amendment to the U.S. Privacy Act, gives EU citizens
greater rights to seek legal redress from alleged improper use of their data by the
U.S. government.

Big Tech Leads the Way

Major U.S. tech companies highlighted the first group of companies certified Aug.
12.

Microsoft was one of the first companies to sign up for the Privacy Shield, the company
said in a statement obtained by Bloomberg BNA. “Any data which we will transfer from
Europe to the United States will be protected by the Privacy Shield’s safeguards,”
the technology giant said in the statement.

Microsoft is the third largest technology company in the world with a market capitalization
of $451.5 billion, Bloomberg data show.

A Salesforce spokeswoman told Bloomberg BNA Aug. 15 that the company “commends the
U.S. and EU governments for their work” on the Privacy Shield. In addition to the
Privacy Shield framework, it uses “binding corporate rules” and “EU standard contractual
clauses,” the spokeswoman said.

The San Francisco-based cloud computing company is the “only top 10 software company
in the world to have all three legal mechanisms for data transfer between the EU and
U.S.,”
she said.

Salesforce is the eighth largest application software company with a market capitalization
if $55.3 billion, Bloomberg data show.

Easy, Hands-On Process

For those who many be worried about the complexities of a new cross-border data transfer
mechanism may put this worry aside, Gonzalez said.

Although there were “some minor glitches, you would expect these with a new program,”
Gonzales said. The hardest part about the Privacy Shield was “accommodating the HR
privacy policy for our EU employees.” It was “only difficult in time, not in complexity,”
he said.

Gonzales also said that the Privacy Shield certification review time is also very
hands on. Within three days of submission, “a reviewer reached out to the company
to make updates to our certification,”
he said. Gonzales “thought it was going to be a more bureaucratic process, but the
issue was resolved” in time for the Aug. 12 certification.

To contact the reporter on this story: Daniel R. Stoller in Washington at
dstoller@bna.com

To contact the editor responsible for this story: Donald G. Aplin at
daplin@bna.com

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